Several years ago my husband and I found ourselves in a frustrating dilemma of always seeming to fall short of budget expectations. We were homeowners, renting an apartment, paying for two vehicles, with two kids and a third on the way.
Now, that seems like a lot of money going out the window- but all of those things added up and with the income from our home being rented out, we technically should have been ok financially. The problem came with how our pay was set up.
Most of you are familiar with the 1st and the 15th of the month or bi-monthly pay. In fact I would bet that everyone has their bills account set up to look something like this:
- 1st of the month mortgage or rent comes out and maybe one or two small bills,
- The 15th is reserved for utilities and other expenses.
This set up was just not working for us however, mostly because both our rent and our mortgage was due the 1st, while our income from our rental property did not deposit until after the 10th. See the problem?
The Solution
We switched to getting our full pay to once a month, on the 1st. Then we set all of our bills (except utilities) to be paid automatically from the 1st. The remaining utility payments (since they changed depending on usage for that month) I entered the amounts directly through our banks bill pay system and set them up to be withdrawn at the same time. This eliminated the 15th deductions and since we now had one large deposit and all of our withdrawals coming out at the same time, allowed us an easy look at what our left over income for the month would be.
No longer did we have to calculate how much money we would need to transfer back and forth between the 1st and the 15th in order to make sure bills would be covered. No more forgetting about which bill would come out the 1st and which bill would come out the 15th. Even after we sold our rental property and no longer had to worry about covering two mortgages (we had since bought a 2nd home) the 1st of each month- we still continue to use the monthly pay system.
At the end of every month I sit down and calculate the next months income and expenses. By using simple Excel formulas I can calculate how much of our remaining income is left after all of our bills are paid (including kids sports and school fees) and then know how much we have left over to budget for gas, groceries and investments.
Is This Solution For You?
This type of pay option isn’t for everyone. When we first did it we had to rely on savings for a month in order to keep current with all of our bills because it takes some time for DFAS to process everything. You might have to take the time to call your credit card, cellphone, insurance or car companies in order to switch the billing dates around. However, if you think this may be something that could work for your family and your budget- have your service member contact their S1 or pay-shop in order to find out more details on how to set their pay for a once a month direct deposit. It’s certainly been a great benefit for our family and hopefully will be for yours as well!
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Lauren Gardner
About the Author: Lauren Gardner is a military spouse and stay at home mom of four amazing children. When she is not playing Uber driver to soccer practice, football, or school functions she is volunteering with her local PTA and organizing activities for local military spouses in her area. In her free time she enjoys reading, writing, working out and playing with her fur-babies. She is also a notorious StarBucks addict and has a secret addiction to leggings, fuzzy slippers and Hallmark movies.
About the Author: Lauren Gardner is a military spouse and stay at home mom of four amazing children. When she is not playing Uber driver to soccer practice, football, or school functions she is volunteering with her local PTA and organizing activities for local military spouses in her area. In her free time she enjoys reading, writing, working out and playing with her fur-babies. She is also a notorious StarBucks addict and has a secret addiction to leggings, fuzzy slippers and Hallmark movies.